Stay solo or scale up with a biggie?

09 Jul,2012

 

By Tuhina Anand with inputs from Shruti Pushkarna

 

Creative hotshops have always co-existed with the bigger networks and every now and then one hears of a celebrated hotshop being taken over by a network. Publicis Groupe, which already had a stake in BBH, has now taken 100 per cent stake in the agency. Considering that BBH is among the most celebrated creative boutiques, the development makes one think that the lifespan of an independent has become short and for them to scale, being part of a network has become a necessity.

 

Bharat Dabholkar, who collaborated his agency Zen Advertising with Publicis Groupe in 1999, is very clear that the only way to scale up is to merge with a network. He said: “When we started, we were servicing homegrown brands; but we realized that with global brands coming in, we had a handicap in getting them on board. By being part of the network, we immediately got access to big, international brands. I think it’s a personal choice, if you are happy servicing a handful of clients, then you can remain independent; but if you have ambitions of growing your outfit, then the way ahead is to merge with a network.”

 

Also read:

Anil Thakraney: BBH must remain the black sheep

“I have also felt that when a client is small in size or have just started with their marketing activities, they will come to a small agency but after having tasted success with grown ambitions, they ditch the small agency and would want a bigger agency on board. They still might continue to work with small agency, but that usually is on few projects,” he added.

 

Giving an understanding of the situation, a well-known financial advisor to media groups said: “First of all, it depends on how well the creative hotshop is doing. My view is that if it’s doing well and wants to scale up, the only way to do that is to align with some network. And the network will align only if you are doing well. If you are just a creative whiz who’s not doing well, nobody will go after you. They will go after you only if you can bring something to the table. I think one has to also look at the age profile of the creative guys. If you are young, then you can afford to be in the saddle of a creative hotshop for a long time without considering the possible money that you can make because you can afford to wait. If you are in the mid 40s, then it’s time to sell it whenever you are at your peak. So that’s an important consideration, what stage are you in.”

 

The scale a network offers is one way that helps the creative hotshops. The second is the access to full-time retainers with most of the bigger clients. The advisor echoes what Mr Dabholkar said: “Whatever you see or hear of bigger clients working with smaller agencies, it’s not a permanent relationship and it goes from campaign to campaign. So when you have that scale, you might end up being the only agency on the roster. So that’s an advantage. Also you need to look at networks which don’t have a great reputation in India, they would like to go after these agencies. For instance, Ogilvy would not like to go after anybody because they have a good reputation here. Whereas for a Omnicom, which is internationally well-known for its creative body of work, there’s nobody here in India. So the networks also look at it from that perspective, because it will be an image booster for that group in India.”

 

But then what about losing one’s independence? After all in most cases the reason the creative people to start their own outfit is the independence that comes with it as opposed to being with bigger agencies. Mr Dabholkar clarified: “As for losing our independent streak being a part of network, my experience was different. Publicis was a delightful network to work with, as it was understood that we had an entrepreneurial streak so they didn’t interfere in our day to day functioning. However, the big help came in terms of sharing knowledge and supporting us with key inputs on businesses.”

 

Sajan Raj Kurup

Mr Dabholkar set up a small agency in Tanzania which has seen positive growth. He is not averse to collaborating this agency to a Network; however he feels that latter would not be interested at this point of time as they wouldn’t see much value in that part of the world in terms of advertising. However, he says that such collaboration helps the people who have worked, as it widens their horizon and opens new windows of opportunity.

 

So it is clear that to scale up sooner or later, either selling of stake or some kind of collaboration is required. However, Raj Kurup who started CreativeLand Asia is very clear that he wouldn’t want to sell because he clearly believes in the India growth story, though he is open to partnering on his own terms. He is looking at expanding footprint and opening office in London. CLA already has a regional office in Singapore.

 

Even Scarecrow Communications that was set up two years back is clear that they have enough going on their own and wouldn’t want to sell stake but are open to collaborating with partners that will help them in maximizing their potential.

 

Naresh Gupta

Naresh Gupta, Managing Partner, Bang in the Middle, who along with partners has got on this entrepreneurial venture recently, said: “There is a future for independents, and a big one at that. Yes BBH got acquired, and some more may get over a period of time, but that for me is the process of evolution. BBH did path breaking work, made a name for itself, and as brand will still stand for the same black sheep thinking even if it’s a part of a network. I see the same thing to happen here.

 

Independents will be the new force. They are nimble, they don’t have previous baggage, they will take greater risk, be more lateral in terms of business model, and be a challenge to the large networks.

 

The larger networks at some stage will always be interested in the independents precisely for the values of thinking different and taking risks. Till the large networks protect those values, it may not even be a bad thing.”

 

Prasanth Mohanachandran

Clearly there are both merits and demerits of aligning with bigger players. Prasanth Mohanachandran, Founder Director, AgencyDigi, said: “A network always has one advantage – of scale. The other advantage they have is, when it comes to multinational brands, most of the brand decisions are not taken in India but in other parts of the globe. When independents come into play, learning is going to be tough because it’s actually two companies talking. The good part about independents is that it is easier for them to think beyond conventional framework. Network agencies think through a set framework, there is a standard process for creative ideation. Also, in independents, egos are smaller.”

 

Mr Mohanachandran feels that while scale is important, when it comes to talking to different markets, it might be difficult to take an idea across to different international markets. “If you play cleverly there are ways around it. If you have like-minded partners, it is easy to work with independents. They have the power to take an idea across the globe, someday it will happen, but it’s still few years away.  In a network of course, there is a larger pool of experience behind running an organization. There are more people, in a network you don’t have to worry about too many things so that’s always a benefit,” he added.

 

So ultimately, it’s a personal choice. You can remain small and thrive or you can have ambitions to scale up where merging with a network seems a better option. Naved Akhtar and Freddy Birdy have been among the most celebrated duo in advertising who quit and started their own agency in 2003, are very clear that they want to remain independent.

 

Naved Akhtar

Naved Akhtar, who quit after spending close to 25 years in mainline advertising, said: “For us it was a question of what we want to do with our life. You can grow and keep running endlessly but we wanted to do our own thing, remain independent and enjoy a quality life. We deliberately don’t want to expand but remain small. We have some big clients like ITC and we are comfortable working with them and never felt that our size was an impediment in delivering.”

 

Clearly, there is no clear answer to advertising agencies aligning with large networks. To each it’s own, we guess.

 

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